18 Oct 2022

CIH response to the Chancellor’s statement

Yesterday, newly appointed Chancellor of the Exchequer Jeremy Hunt announced several reversals to elements of the government’s growth plan. This included reinstating the basic rate of income tax at 20%, until economic conditions allow for it to be cut.

The Chancellor also announced that the Energy Price Guarantee and the Energy Bill Relief Scheme will only run in their current format for six months, rather than two years. There will be a Treasury-led review to consider how to support households and businesses with energy bills after April 2023.

Other elements of the growth plan remain in place, including:

  • The cut to stamp duty
  • The reversal of the National Insurance increase and the Health and Social Care Levy

Further detail and other measures will be provided in the Medium-Term Fiscal Plan on 31 October. The Chancellor has stated that government departments will be asked to find efficiencies to help ensure public finances are sustainable, indicating that public spending cuts will shortly be announced.

Responding to the announcement by the Chancellor, CIH director of policy and external affairs, James Prestwich said:

“We welcome yesterday’s announcement by the new Chancellor, which should provide greater economic stability. Borrowing rates rose substantially following the previous Chancellor’s mini budget which will put pressure on landlords to raise rents at a time when tenants are struggling to cope with the current cost of living crisis. We hope that the measures announced today will help to prevent economic uncertainty from putting further pressure on household finances.

However, we are concerned that these announcements do not provide sufficient support for families on low incomes, who are enduring the worst of the cost of living crisis. Last week we sent a joint letter with PlaceShapers to the Secretaries of State for DLUHC and DWP emphasising that government actions to deliver growth cannot be at the expense of the people who are struggling the most.

Whilst we accept that the energy support schemes were not well targeted on households experiencing fuel poverty, we are concerned that limiting guaranteed support to six months – without a clear plan for ongoing support – will cause unnecessary anxiety for families already struggling. The Treasury-led review to consider how to provide support beyond April 2023 must provide prompt reassurance that government assistance will continue for those most in need. Ongoing, targeted support must meet true levels of need; the £2,500 cap on average household bills still left seven million households in fuel poverty.

The best way to tackle fuel poverty, now and in the future, is to increase the energy efficiency of the UK’s poorly insulated homes. We urge the government to invest in a national retrofit program that would reduce fuel poverty and stimulate economic growth; research by the IPPR shows that a government retrofitting program could sustain over 400,000 direct jobs and 500,000 indirect jobs by 2030.

It is vital that public spending cuts do not impact the Affordable Homes Program and reduce the number of new social and affordable homes being built. This would be hugely damaging given government statistics and reports from the APPG for Ending Homelessness and the Kerslake Commission on Homelessness and Rough sleeping all show homelessness is rising. Local authorities’ budgets are already stretched and further cuts may threaten the provision of statutory services, some of them vital to housing such as social care, homelessness prevention, planning of new housing and enforcing standards in the private rented sector. All of these are already under severe strain; even before the Chancellor’s statement, CIPFA analysis showed that current local government funding is insufficient to meet demand in adult social care, children’s social care, and neighbourhood services.

We must stress that it is imperative that the government commits to fully uprating all benefits in April with the September Consumer Prices Index figure (published tomorrow) and that local housing allowance rates are restored to the 30th percentile. Failing to do so would permanently cut income for households on benefits and push thousands more into poverty. Between April 2021 and March 2024 the number of people in absolute poverty is projected to rise by 2.9 million. If working age benefits are not fully uprated, that will add another 600,000, half of which will be children.

While we welcome the changes in today’s budget announcement, we remain concerned about the impact of government decisions on low-income households and cuts to public spending. We will continue to call on the government to provide the support needed.”